Draconian Circular - Departmental Officers don High Court's Role
IT is not lawyers alone that benefitted from CBEC's New Year Circular on arrears recovery. Immediately after the circular was issued, the Departmental officers started sending letter missiles to the assessees threatening attachment and sale if the demands of duty were not paid up immediately. Worried assessees are running around Central Excise officers and those of consultants. The department does not really have the machinery to attach and sell the property of every assessee. So there is an element of discretion --- and the consequential benefits. It seems that this circular is a bundle of opportunity to make money for some Central Excise Officers. Already bribes are being demanded for not giving the attachment notices and not enforcing them and many such officers are grateful to the Board for the benevolent circular. The plea is that you have to spend a couple of lakhs to pursue the matter in the High Court - instead of paying the lawyers, pay us - we will give you a stay that the High Court gives.
Not a paisa to the State but there are several beneficiaries!
The virus of the Circular created so much damage that CESTAT Bangalore issued a Suo Moto order virtually striking down the circular. ( 04.04.2013)
This draconian circular which caused so much of litigation and wasted huge amounts of money and time was highlighted by the Board as a trade facilitation measure in the ministry's annual report for 2013-14 . ( 13.08.2014)
With the advent of mandatory pre-deposit with effect from 6.8.2014, this draconian circular lost much of its 'draconity' at least for the post 6.8.2014 period. In Circular No. 984/08/2014-CX dated 16.09.2014, Board had clarified that the draconian circular would not apply to cases where appeal is filed after the enactment of the amended Section 35F of the Central Excise Act, that is 6.8.2014.
This is but a small example of the humongous damage that a simple circular from the Board can cause with absolute impunity.
Our CobWeb 337 on 28.03.2013 observed, "the Circular 967 may look villainous but it also helped expose the festering malady of the system."
But things are changing - for the better; concepts like ‘ease of doing businesses' are seriously considered.
BOARD HAS WITHDRAWN THE DRACONIAN CIRCULAR. And issued a new Circular - in tune with the latest policy.
The New Circular stipulates that:
1. In cases where stay application is pending before Commissioner (Appeals) or CESTAT for periods prior to 06.08.2014, no recovery shall be made during the pendency of the stay application.
2. For subsequent period i.e. from 06.08.2014 onwards, instructions contained in Circular No. 984/08/2014-CX dated 16.09.2014 shall continue to be followed.
3. When demand is confirmed by CESTAT or High Court & stay is pending before High Court or Supreme Court:As a measure of liberalization and to ensure uniformity of practice, recovery proceeding in relation to an order of High Court or Tribunal confirming demand of duty, may be initiated only after a period of sixty days from the date of order of the Tribunal or High Court, as the case may be, where no stay has been granted by High Court or Supreme Court against the order of Tribunal or High Court, respectively.
4. Instructions in CBEC's Excise Manual of Supplementary instructions on the above subject or any other circular, instruction or letter contrary to this circular stand amended to the extent of the conflict.
5. Seven circulars which had been rescinded vide Circular No. 967/1/2013-CX dated 01.01.2013 shall continue to remain rescinded.
I would be happy to send the Board a bouquet of the choicest flowers for this great circular, consigning the much maligned draconian circular to the dustbin of history.
CBEC CIRCULAR NO 1035/23/2016-CX, Dated: July 4, 2016